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Ask HN: How is Covid-19 affecting digital ads revenue at Google/Facebook

18 points by kediz ↗ HN
LA times just decides to "decided to furlough a number of employees" because "our advertising revenue has nearly been eliminated"[1]. Just wonder if the same thing is gonna happen at digital ads. If so, I wonder how long can Google/Facebook sustain before starting cutting expenses.

Sources: [1]:https://www.nytimes.com/2020/04/14/business/los-angeles-times-furloughs-cuts.html

7 comments

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nostrademons
You can get some idea of worst-case scenarios from their publicly available financials. Google has $120B in cash [1] and operating expenses of $54B [2]. If they lose all their revenue, they can continue operating for another 2 years. Facebook has $54B in cash [3] and operating expenses of about $33B [4]; they can operate for 1.5 years with no revenue.

Their margins are also pretty good. Facebook has profits of $25B on revenues of $70B for about 40% margins [4]. Google has profits of $35B on revenues of $160B for about 20% margins [2]. These are conservative approximations of the rough percentage drop in revenues that they could sustain and still remain profitable. (In actuality, "cost of revenue" tends to go down as revenue does, so both of them could sustain a roughly 50% drop in revenue while remaining profitable.) Note that runway and burn rate have a reciprocal relationship: if these companies sustained the 50% revenue drop mentioned above, they'd still have infinite runway, while if they sustained a 75% drop, they'd have a ~5 year runway.

[1] https://finance.yahoo.com/quote/GOOG/balance-sheet?p=GOOG

[2] https://finance.yahoo.com/quote/GOOG/financials?p=GOOG

[3] https://finance.yahoo.com/quote/FB/balance-sheet?p=FB

[4] https://finance.yahoo.com/quote/FB/financials?p=FB

[dead] africasiaeuro
You actually seem to believe both Google and Facebook depend on mere ads to exist. Amazing how many people still have this notion. According to this Google and Facebook will cease to exist in 2-1.5 years. Keep on dreaming.
Mike_Andreuzza
A lot,for me now is almost 0, I made 0.89 cents in 2 weeks on https://www.colorsandfonts.com with doigital ads

I am using codefund...

jdorfman
Hey Mike. Inventory is lower than usual but we do have a new sales guy who is starting to bring on new advertisers. We are doing everything in our power to rebound during this pandemic. Email me or ask me here if you have any other questions. Justin at codefund dot io
Mike_Andreuzza
Hey Justin! Nice to hear that... I am actually thinking on removing ads completely by now until it gets better.

Is nothing personal, I just think is not fair, the companies displayed get awareness but I get nothing back and the user experience gets touched. I am working on the redesign relaxed-dijkstra-1e8c58.netlify.com I will see what I do.

I appreciate you reaching out.

Thank you Justin.

/Mike

jdorfman
Hey Mike, all good! You do what's best for your users. The new design looks great! Keep in touch.
Mike_Andreuzza
If I go back to ads, believe it won't be another one than Codefund. Love the concept, implement and the fact they are ethical.

Thank you.

We do keep in touch, have a great day justin.